Comments from Eurodad on recent announcements from the US administration regarding the OECD-led tax negotiations in the Inclusive Framework


According to the Financial Times and other news media, the US Administration has put forward specific proposals for the design of future global tax standards, which are currently being negotiated within the OECD-led “Inclusive Framework”.

As reported by the media, the US proposals include the idea of establishing a minimum corporate tax rate of 21 per cent, and at the same time limiting the scope of a new taxing right under Pillar 1 to the 100 largest corporations in the world.

A new taxing right (Pillar 1)

Tove Maria Ryding, Tax Coordinator at the European Network on Debt and Development (Eurodad), commented:

“We hear that the US administration has suggested to limit the new rules under Pillar 1 to the largest 100 corporations in the world. We were already skeptical towards the OECD’s proposal, which was to limit the scope of Pillar 1 to approximately 2,300 corporations, but this is even more extreme. The idea of setting up a new global tax system that will only apply to 100 corporations is really absurd. What we needed was a fundamental reform of the broken OECD transfer pricing system, but unfortunately, the OECD never really considered that option. Instead, the suggestion is now to put an extra system on top of the old one. The corporate tax system was highly complex and ineffective to begin with - now there is a real risk that it will be going from bad to worse."

Minimum global corporate tax rate (Pillar 2)

Tove Maria Ryding added:

“The US administration has suggested a global corporate minimum tax of 21 per cent, but two big questions need to be answered: will the rules really be effective, and if so, which countries will get the money? In terms of effectiveness, the big challenge will be resistance from the countries that still today have tax rules which allow international corporate tax avoidance to happen. This includes EU countries such as Ireland, Luxembourg and the Netherlands. In terms of where the money goes, the US and OECD seem to agree that the lion’s share should go to the countries where multinational corporations are headquartered – meaning primarily wealthy OECD countries. Therefore, the world’s poorest countries are once again at risk of losing out when the global tax pie gets divided, despite the fact that they are more in need of tax income than anyone else.

About the negotiations overall

Tove Maria Ryding added:

One thing that hasn’t changed is the bias in favor of the interests of wealthy countries. In both the US and OECD proposals, the suggested rules favour the countries where large number of consumers and corporate headquarters are based. This means that we are once again sliding towards a global tax system that prioritises the interests of rich countries at the expense of poorer countries. To state the obvious, this is completely unacceptable.

As long as the global tax negotiations are led by the OECD, we’re stuck in a world where the US gets to set the global tax agenda, and everyone else is pressured to follow suit. The global tax system must not be based on the “America first” principle – it should be based on the principles of equality, fairness and people first. All countries must be able to participate in the negotiations on a truly equal footing, and the place where this can happen is the United Nations.”

In February 2021, the FACTI high-level panel recommended that an intergovernmental tax body be established under the UN, and that a new UN tax convention should be negotiated.

“The current political dynamics in the OECD negotiations is a stark reminder of how important it is to set up a real global UN negotiation where all countries can participate as equals, and develop a fair and balanced UN tax convention”, added Ryding. 


Media contact: Julia Ravenscroft, Communications Manager, Eurodad: +32 486 356 814/ [email protected]